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What's Working, and Not Working, in Supply Chain Management

Chasing cheap labor and managing in silos are just two of the mistakes that Jeffrey Karrenbauer, president of Insight Inc., says companies continue to make. Karrenbauer shares his opinions about these and other practices that are, and are not, working in supply chain management.

Supply chain management has made progress in the last few decades, as demonstrated by professionals reaching executive management positions, but it is still falling short of its potential, says Karrenbauer. “The supply chain is an integrative function and we still have too many companies practicing silo management,” he says. “This results in a lot of dysfunctional behavior and a lot of money being left on the table.”

This won’t change until companies change their compensation and evaluation structures, he says. “As long as silo management is rewarded, that is what we will get.”

Chasing cheap labor costs with manufacturing outsourcing is another tactic that often has failed to return any real savings, he says. “Savings from outsourcing were always something of a mirage, but if they ever were there they’re not any more,” he says. “Many studies now say that the lines representing the costs of producing in the U.S. and in China will cross in 2015.” Instead of looking at all the cost components of sourcing from China, companies looked only at labor costs, he says.

Another disappointing area is the scarcity of good supply chain programs at universities, says Karrenbauer. “If you push me up against a wall and threaten me, I might be able to name 15 really good programs and we have more than 850 MBA granting institutions. That is just plain wrong,” he says. Universities continue to funnel resources into marketing, finance and accounting and starve supply chain programs, even though supply chain management has at least as much to do with business success as the other disciplines. “This is a real disappointment and there is just no excuse for it, other than academic inertia.”

There are things for supply chain management to be proud of, however, says Karrenbauer.  “Supply chain has a lot more respect in the C-suite than it used to, and that is a success. I also am very proud of how many women are building successful supply chain careers.”

To view the video in it entirety, click here

Keywords:  supply chain management, supply chain jobs, outsourcing, re-shoring, logistics management, logistics & supply chain

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